Losing a spouse

Preparing for such an eventuality can help during a time of turmoil

A reader whose husband passed away suddenly asked me if I have any financial suggestions for new widows.

First, consider putting off big decisions—such as moving—for at least six months and preferably a year. In the immediate fog of loss you can’t expect to make clear-headed decisions.

And the best advice I can give is for couples where both spouses are very much alive. Careful planning now is a gift for the eventual surviving spouse.

Both spouses must engage—today

The odds are higher that wives will survive their husbands (see “Age probabilities”), yet for many couples, husbands are still in charge of the financial planning. I am fine with that, but with two conditions: Your wife is fine with you driving, and she is riding shotgun on every consequential decision.

It’s no different with same-sex couples. One partner can be in charge, but both must be financially fluent. This is how you make sure today that the survivor will not be overwhelmed when he or she is grieving a loss.

Focus on the surviving spouse

Always put the best interests of the surviving spouse first when making key retirement decisions. A surviving spouse is entitled to just one Social Security benefit: either their own or that of their deceased spouse. You can claim benefits as early as age 62, but if you wait until age 70 to start you are guaranteed the highest possible benefit.

My advice is for couples to see if they can manage for the higher earner in their household to wait until age 70 to claim benefits. That will leave the survivor with the biggest possible monthly check.

For those of you with a pension that you will rely on to cover basic living costs in retirement, choose the joint and survivor benefit. This means your surviving spouse will keep receiving a payout if you die first.

After choosing joint and survivor, you then need to decide if you want the survivor to be entitled to 100% of your payout (which means a lower payout while you are alive) or a smaller percentage, such as 50% or 75% (which would mean a higher payout while you are alive). Ask yourself: What is the best choice to make sure the survivor will have the income he or she needs to continue to live comfortably?

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